Binary Candies

The Chinese government has declared it illegal to buy and sell virtual goods for real money. (http://www.informationweek.com/news/internet/ebusiness/showArticle.jhtml?articleID=218101859)
For the most part I am against everything the Chinese government is doing to police the internet but I am really happy about this one. It may be a bit hypocritical of me to be saying so because I have myself engaged in my share of “morally questionable” online activities, but for some reason I draw the line on this one. It might be due to the fact that I have seen the social and economic toll that RMTs bring to games.
RMTs cause an easy way to get money in game which promotes spending, which in turn causes high inflation. If the price of an item was high before, just spending a small amount of money and buying in game currency lets the player easily buy the item vs hours of farming, which causes the sellers to slowly mark up the prices.
Eventually the RMTs are usually banned from the game and then all the currency in their accounts are also removed from the game causing a depression.
Now of course one can argue the RMTs bring about economic boom and that it helps people who sell goods because they can sell for higher prices and eventually the effects trickle down to everyone. Also, is the depression caused by removing the RMTs actually the economic equilibrium of the game? And how exactly do the RMTs produce so much currency?
Basically how it works is, RMTs spend minimal amounts of money on their characters. Using the cheapest gear possible they max out their characters and then they go after boss mobs for item drops and farm other things that they can sell for game currency. All while spending minimal money on their own characters. They generally use numbers or time to make up for their lack of gear. For the most part time spent in game the more value a character has, sometimes in the form of currency or gear or levels. By having minimal gear, RMTs amass a large amount of currency and then sell it. Now by doing so the rest of the game community suddenly has more money per character than before and this is what causes inflation. Next though, the RMTs start to take advantage of this inflation charging higher and higher prices for items that they farm and sell. At some point their production gets to a level so high that they can actually control the economy and they start to amass even more currency.
The biggest problem is these economic swings of inflation and deflation that the RMTs create. Once RMTs get banned from the servers, the economic downfall is so huge and has so much momentum it passes the equilibrium point and causes a depression where no one has spare currency to spend and people who do don’t want to spend it thinking it will be so much harder to build up their wealth again.
I think the solution is for the game development studios to let people buy in game currency directly from the game. Not like the way most free to play games make money from micro transactions. Have an economist control the rates to adjust for the economy. Also maybe have 2 types of currency, one that is from in game items and the 2nd which is bought using real money, and have the best gear in the game not for sale with the latter.
China making buying and selling virtual goods for real money helps the problem but it is no where near a solution. RMTs will always be around and it is up to the game development studios to make it so difficult and unappealing to deal with RMTs that people won’t do so.
I am looking forward to seeing how future games deal with this problem and hoping that a good solution is found soon.